Part 3: Reasons to Purchase Investment Property Under Your Own Name
Purchase Property Under Your Own Name
As you probably guessed, the most obvious way to purchase real estate (like any other form of property) is simply in your own name, without any other legal vehicle. Here are a few things to consider:
• Legal fees: Drafting the paperwork for either a realty trust or an LLC will require an attorney and other costs, which means more closing expenses. You can avoid the extra cost by putting the property in your own name.
• Insurance: Liability insurance is cheaper if the property is under your name, rather than being owned by an LLC. If you buy a single-family home under an LLC, your insurance premium might be twice the amount it would have been under a realty trust or in your own name.
• Mortgages: It can be easier to obtain a mortgage under your own name, because banks will want to be able to threaten your personal assets should you default payments for your loan.
The main drawback to buying under your own name is the liability. Your personal home and other assets are exposed to lawsuit risk. Be sure to obtain an appropriate insurance policy to limit your level of risk in case someone is injured on the property.
As you can see there are a few different ways that you can plan to purchase your investment property. The best thing to do is to discuss your options with a professional and get advise from others that have purchased their properties in these various ways!
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